The consumer market in India, estimated at Rs 110 trillion in 2018, will grow at a compounded annual growth rate of 12 percent over the next 10 years, almost mirroring the growth of the last decade, as per a report by Boston Consulting Group.
The consumer market grew by 13 percent in the last decade.
Going forward, assuming conservative GDP growth increase of 7.3 percent between 2018-23 and 6.2 percent between 2023-28, the domestic consumption is expected to triple to Rs 335 trillion by 2028, according to the report.
Titled, "Going for Gold: By Creating Customer Who Create Customers", the report stated that Between 2008 and 2028, the share of private consumption in India’s GDP is estimated to increase from 57 percent to 62 percent, which is higher than the emerging market average which is expected to stay constant at 50-51 percent.
"India’s consumption has grown at 13 percent in the last decade and is likely to continue to grow at 12 percent over the next 10 years – from Rs 33 trillion in 2008 to Rs 330 trillion in 2028. But the drivers of the future are going to be different than in the past," said Abheek Singhi, Senior Partner and Asia-Pacific Lead, Consumer Practice, BCG India.
The growth is expected to be driven by increasing population, higher affluence, continued urbanization, and shifting family structures, the report said.
With 8 percent growth in average spend per household across all income segments, the critical differentiator in consumption growth has turned out to be expanding base of affluent and elite households.
"These households have grown at 10 percent annually in the last decade to double their share from 6 percent in 2008 to 12 percent in 2018," the report said.
Subsequently, consumption by affluent and elite grew at 20 percent at CAGR to be one-third of the total consumption.
The report pointed out that the demand increased both in both products and services, with clothing and footwear, and healthcare among the fastest growing categories.
While clothing and footwear grew by 16 percent CAGR, healthcare registered a 14 percent growth.
Categories such as financial services, social protection and jewellery also registered strong growth between 15-19 percent annually.
The report also said that share of organized and online retail has expanded rapidly in the last decade.
Share of offline-organised retail increased at 25 percent per annum, from 5 percent in 2008 to 12 percent in 2018.
Further, the share of online retail expanded to 3 percent of total retail spending, growing at 78 percent per annum.
Moreover, reducing cost of smartphones, cheaper data packages and mobile-friendly content led to an increase in the number of online shoppers from 4-5 million in 2008 to 110-120 million in 2018.
(1 trillion = 1 lakh crore)
